Wednesday, August 31, 2016

Philadelphia Seventh Among Markets Without Enough Self-Storage

by Steve Lubetkin,
Philadelphia ranks seventh among markets without sufficient self-storage capacity.

“Analysis by major Metro Markets can be useful for comparison from a national perspective but these metrics should not be relied upon for local area analysis. Factors that affect local self-storage product type include zoning regulations, local demographics, household income and density, among others.The best analytics for this sector are by local trade area. From our Investor Surveys and zip code studies of existing facilities, it is clear the trade area for self-storage is relatively small, generally within a three-mile radius for a typical suburban property.”

The report ranks market conditions overlaid with a scoring model based on occupancy, income, and cap rate data in top Metro markets based on REIS data, along with cap rate data.  The result is a ranking of top Metro Markets for self-storage, segmented among top performers and market conditions (under-supply, over-supply, or equilibrium).

Among the markets identified in the report as having too much self-storage supply are: Oklahoma City, Memphis, Columbus, Kansas City, Salt Lake City, Houston, Dallas and Seattle. The top five under-supplied markets are New York, San Jose, Los Angeles, San Diego and Baltimore.

Market conditions are determined by econometric model that compares existing supply per person to four demographic variables: population, percent of renters, average household size and average household income

“In the City of Philadelphia, we are seeing conversions of older industrial loft buildings into self-storage facilities and servicing a smaller radius due to the higher density. In the suburbs, we are seeing a proliferation of modern facilities with primarily climate-controlled units.”

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